‘M&A? No, I’m too busy. We’re too busy doing AI and VMware at this point,’ Broadcom CEO Hock Tan said on the company’s earnings call.
Broadcom CEO Hock Tan said the nearly $60 billion tech giant is not currently interested in any mergers and acquisitions amid reports Broadcom was eyeing the purchase of Intel’s chip design business.
When asked during Broadcom’s first fiscal quarter financial earnings report last week if it was looking at any M&A, Tan said the company is “too busy” investing in AI and still working through its blockbuster $69 billion acquisition of VMware that closed about 16 months ago.
“M&A? No, I’m too busy. We’re too busy doing AI and VMware at this point,” said Tan. “We’re not thinking of it at this point.”
[Related: Broadcom’s CEO On $4B AI Sales, Tariffs, VMware And ‘Stepping Up’ Cloud R&D]
Tan’s comments came after reports surfaced last month that Broadcom was eyeing the purchase of Intel’s chip design business.
Broadcom reportedly was in discussion with advisers on making an acquisition bid specifically for Intel’s large chip design business, which includes its Core and Xeon CPUs for PCs and servers. Reports said the deal would have depended on another company buying Intel’s chip manufacturing business, Intel Foundry.
“It’s a smart move by Broadcom to not pursue it right now,” said one top executive from a Broadcom-VMware partner who declined to be identified. “It would be too much, too fast. … It’s just not the right time. Maybe next year if things keep looking good and the purchase becomes more favorable to [U.S. President Donald Trump’s administration].”
The executive said Broadcom has a history of acquiring companies, followed by slashing costs and portfolio consolidation with the ultimate goal of achieving better profitability.
“Intel sort of needs a Broadcom-like acquirer right now, but I don’t think [Broadcom] has the time and integration energy. They need to focus on finishing moving VMware customers around and see where they all land,” he said.
Intel Woes
Intel has been the source of acquisition rumors this year in light of growing financial challenges that prompted the semiconductor giant last August to announce a $10 billion cost-cutting plan that resulted in the company slashing more than 15,000 jobs.
Even before acquisition rumors began to pop up, Intel had taken steps to separate its Intel Foundry chip manufacturing business from its Intel Products chip design business.
For Intel’s most recent fourth-quarter 2024 earnings, the company reported $14.3 billion in sales, down 7 percent year over year.
“Broadcom would likely tear up the [Foundry] business somewhat and make changes to things like Intel’s AI chips and things like networking,” said the executive.
Intel has already canceled plans for its next-generation AI chip, which had been code-named Falcon Shores.
“I just don’t think they’re ready for another massive integration and cost-cutting project right now,” he said. “As a partner, I’m glad they’re not overbooking themselves because they have a lot going on.”
VMware Momentum
Broadcom generated $14.9 billion in total sales during its first fiscal quarter 2025, besting Wall Street’s expectations of $14.62 billion. The Palo Alto, Calif.-based company’s $14.9 billion in revenue represents a 25 percent year-over-year increase.
In addition, Broadcom’s net income increased by 315 percent to $5.5 billion in first-quarter 2025 compared with $1.3 billion year over year.
Broadcom’s infrastructure software division, which includes VMware software, reached $6.7 billion in revenue during the quarter, representing an increase of 47 percent year over year.
Tan said VMware’s growth was due to two reasons.
“One, we’re converting from a footprint of largely perpetual license to one of full subscription. And as of today, we are over 60 percent done,” Tan said. “Two, these perpetual licenses were only largely for compute virtualization, otherwise called vSphere.”
VMware vSphere is now part of the VMware Cloud Foundation packaged bundle offering.
Tan said Broadcom is “upselling customers to a full-stack VCF” that enables customers to virtualize their data center and “create their own private cloud environment” on-premises.
“As of the end of Q1, approximately 70 percent of our largest 10,000 customers have adopted VCF,” he said. “As these customers consume VCF, we still see a further opportunity for future growth.”
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